Contents
His Excellency the Governor General in Council, on the recommendation of the Minister of Industry, Trade and Commerce, the Minister of Regional Economic Expansion and the Treasury Board, pursuant to section 7 of the Department of Industry, Trade and Commerce Act and Vote 1a (Industry, Trade and Commerce) of Appropriation Act No. 1, 1980-81, is pleased hereby to make the annexed Regulations respecting Canadian Industrial Renewal.
Short Title
1#
These Regulations may be cited as the Canadian Industrial Renewal Regulations.
Interpretation
2#
In these Regulations,
application means a loan application, an insurance application or a contribution application made pursuant to these Regulations; (demande)
board [Revoked, SOR/86-718, s. 1]
business enterprise means an eligible manufacturer or a designated business; (entreprise commerciale)
contribution means any contribution authorized under a vote of an Appropriation Act; (contribution)
designated business means a person carrying on a manufacturing or processing activity or other commercial activity in a designated community; (entreprise désignée)
designated community means an area designated for the purposes of these Regulations pursuant to section 6 of the Department of Regional Economic Expansion Act; (communauté désignée)
eligible manufacturer means a manufacturer engaged or about to engage in an eligible manufacturing or processing activity; (fabricant admissible)
eligible manufacturing or processing activity means an activity whereby goods or services are manufactured or provided by establishments that are classified or would normally be classified under any of the following:
(a)Major Group 3, Establishments under S.I.C. 1624, Rubber Footwear Manufacturers,
(b)Major Group 4,
(i)Establishments under S.I.C. 172, Leather Tanneries,
(ii)Establishments under S.I.C. 174, Shoe Factories,
(iii)Establishments under S.I.C. 175 that are primarily engaged in manufacturing gloves and mittens of leather,
(c)Major Group 5, Textile Industries, other than Establishments under S.I.C. 1899, Miscellaneous Textile Industries, n.e.s. that are primarily engaged in the manufacture of hygiene products and whose manufacturing of textile materials used in the manufacture of hygiene products is solely for the purposes of manufacturing their own hygiene products,
(d)Major Group 6, Knitting Industries,
(e)Major Group 7, Clothing Industries, or
(f)Major Group 20,
(i)Establishments under S.I.C. 3931, Sporting Goods Manufacturers, where the manufacture of sporting, recreational or athletic footwear is a substantial part of production,
(ii)Establishments under S.I.C. 3993 that are primarily engaged in manufacturing coated fabrics, including oil cloth, leatherette and water repellant fabrics other than rubberized fabrics,
of Division 5, Manufacturing Industries of the Standard Industrial Classification (S.I.C.) of 1970; (travaux de fabrication ou de transformation admissibles)
external or other business means a person that carries on a manufacturing or processing activity or other commercial activity at a place other than a designated community or a person that intends to carry on a manufacturing or processing activity or other commercial activity and that is prepared to carry on a manufacturing or processing activity or other commercial activity
(a)in a designated community, or
(b)in a community, other than a designated community, that has a population of less than 100,000 and is located within a Canada Employment Centre area where employment in eligible manufacturing accounts for at least 20 per cent of manufacturing employment and 5 per cent of total employment and that has been severely affected by a major shutdown or layoff in an eligible manufacturing or processing activity; (entreprise externe ou autre entreprise)
manufacturer means a person engaged in a manufacturing or processing activity in Canada; (fabricant)
manufacturing or processing activity means an activity whereby any goods, products, commodities or wares
(a)are made, fabricated, processed or refined out of any raw material or other substance or combination thereof,
(b)are converted or rebuilt, but not repaired, or
(c)are made by causing any raw material or other substance to undergo a significant chemical, biochemical or physical change including change that preserves or improves the keeping qualities of that raw material or other substance but excluding change by growth or decay; (travaux de fabrication ou de transformation)
person includes an individual, partnership, association, body corporate, trustee, executor, administrator or legal representative but does not include an individual, partnership, association, body corporate, trustee, executor, administrator or legal representative who is primarily engaged in pulp and paper manufacturing falling under group 271 of Division E, Manufacturing Industries of the Standard Industrial Classification (S.I.C.) of 1980; (personne)
private lender means a financially sound and reliable lender other than
(a)the Government of Canada,
(b)the government of any province of Canada,
(c)an agency of any government referred to in paragraph (a) or (b) or any company that is effectively controlled by that government or any agency thereof, or
(d)any municipal corporation; (prêteur privé)
restructure means a change that is significant in the operations of a business with respect to its products, methods of production, markets or management procedures and includes, if directly related to such operations, the acquisition of working capital or the acquisition, construction or conversion of machinery, equipment, buildings, land or other facilities. (restructuration)
note
Part I · Minister
3#
(1)The Minister shall administer the loans, insurance and contributions made or authorized under these Regulations.
(2)The Minister may, on behalf of Her Majesty, enter into and execute any agreement necessary to give effect to these Regulations.
(3)The Minister may, in respect of any loan, insurance or contribution made or authorized under these Regulations, require such information and documentation and make such stipulations as may be necessary in relation to such loan, insurance or contribution.
(5)The Minister shall do everything that is necessary or appropriate to facilitate the efficient operation of these Regulations, to minimize any loss suffered or threatened to be suffered by Her Majesty arising out of any loan or insurance administered by the Minister pursuant to these Regulations and to maximize the potential economic gains to Canada arising from any contribution administered by the Minister pursuant to these Regulations.
Part II · Loans
4#
Subject to section 7 where, pursuant to these Regulations, the Minister has authorized the provision of insurance on a loan made by a private lender to a person, the Minister may make a loan in an amount not exceeding, in the aggregate, 50 per cent of the amount of the private lender’s loan to that person on the following conditions:
(a)the private lender has agreed to make the loan for which the Minister has authorized the provision of insurance pursuant to the terms and conditions set by the Minister in accordance with these Regulations;
(b)the loan made by the Minister shall bear interest at a rate of not less than the aggregate of interest to be charged by the private lender on the insured loan and the insurance fee thereon;
(c)the loan is essential to prevent a serious delay in implementing the program for which the loan by the private lender was obtained;
(d)the loan shall be repaid on the date of the first disbursement of the loan advanced by the private lender or on such date as may be set out in the loan agreement between the Minister and the applicant; and
(e)the Minister shall specify the date on which the loan shall be repaid in the event that a disbursement to repay the loan has not been made by the private lender within a reasonable time as established by the Minister.
note
5#
Subject to section 7, where a person or a trustee or receiver authorized by law to carry on the activities of that person has previously obtained assistance by way of a loan or insurance on a loan made or authorized under these Regulations, the Minister may make a loan to that person or to the trustee or receiver for the purpose of protecting the Crown’s interest in respect of the loan previously made or insured.note
6#
(1)Where a person submits adequate plans, developed with the assistance of a qualified consultant, that are based on a feasibility study made by a qualified consultant for the merger with or acquisition of a business enterprise and the person that submits the plans requires a loan
(a)to purchase the effective ownership control of the business enterprise or the whole or a significant portion of the assets of the business enterprise that are related to its activity, or
(b)to effect the merger or amalgamation with the business enterprise,
Condition of a Loan
Application for a Loan
8#
(1)A person that requires a loan in accordance with these Regulations shall apply therefor to the Minister and shall provide such information as may be necessary in order to process the application.
(2)Where an appplication for a loan is approved by the Minister, the applicant shall enter into a loan agreement with Her Majesty.
Interest
9#
The rate of interest for any loan made pursuant to section 5 or 6 shall be determined by the Minister as of the day the application therefor is approved by the Minister and shall be not less than the rate of interest charged by the Government of Canada to Crown corporations for loans of a similar term nor higher than 3 per cent above the rate.note
Term of Loan and Repayment
10#
(1)A loan made pursuant to these Regulations shall be for such term, not exceeding 20 years, as may be fixed by the Minister.
(2)The whole or any part of a loan made pursuant to these Regulations may be repaid in advance of the repayment date in accordance with the terms of the loan agreement and without notice, bonus or penalty.
Security
11#
(1)Where it is advisable to obtain security for the repayment of a loan made or authorized under these Regulations, the Minister shall obtain or hold the appropriate security.
(2)The Minister may surrender, retransfer or reconvey any security obtained or held by it pursuant to subsection (1) in exchange for other security or amend the provisions thereof.
Part III · Insurance
General
12#
Subject to section 17, the Minister may provide insurance on a loan made by a private lender to
(a)a business enterprise if the business enterprise requires the loan to restructure its operations in order to improve its position in international trade competition;
(b)an eligible manufacturer if the eligible manufacturer requires the loan to engage in the manufacture of products that will be subject to international trade competition;
(c)a designated business if the designated business is about to engage in a manufacturing or processing activity or other commercial activity and will be subject to international trade competition; or
(d)a person if the person requires a loan to acquire a corporation or group of corporations engaged in an eligible manufacturing or processing activity or located in a designated community and the acquisition will result in a significant increase in manufacturing or processing activities or other commercial activities.
note
13#
Subject to section 17, the Minister may provide insurance on a loan made by a private lender to a business enterprise or a trustee or receiver authorized by law to carry on the activities of the business enterprise if
(a)the business enterprise is subject to international trade competition;
(b)the business enterprise is in financial difficulty that threatens the cessation of a significant portion of its operations and the layoff of a significant number of its employees; and
(c)the business enterprise proposes the sale of all or a significant portion of its assets or the person that holds effective ownership control of the business enterprise proposes the sale of such control and
(i)the business enterprise requires a loan to continue its operations until the assets are sold or effective ownership control of the business enterprise is sold, as the case may be,
(ii)the sale will be effected within a reasonable period of time, and
(iii)the sale will enhance the prospects for the continued employment of a significant number of its employees.
note
14#
(1)Subject to subsection (3), the Minister may provide insurance on a loan made by a private lender to a person if the person requires the loan to
(a)acquire effective ownership control of a business enterprise;
(b)acquire from a business enterprise the whole or a significant portion of the assets of the business enterprise; or
(c)restructure its operations as a result of the acquisition by the person of the whole or a significant portion of the assets of a business enterprise.
(2)Subject to subsection (3), the Minister may provide insurance on a loan made by a private lender to a business enterprise in Canada to restructure its operations if the business enterprise requires the loan to restructure its operations as a result of the acquisition of its effective ownership control by a person.
(3)The Minister may provide insurance pursuant to subsection (1) or (2) on the following conditions:
(a)the person referred to in subsection (1) or the business enterprise referred to in subsection (2) that requires a loan has agreed
(i)to provide or to cause to be provided to the private lender an appropriate guarantee for 10 per cent of the amount of the loan to be provided, and
(ii)to provide the private lender with appropriate security on the assets acquired or on the assets of the corporation the effective ownership control of which has been acquired; and
(b)the acquisition or restructuring in respect of which the loan is required
(i)is essential to prevent a serious disruption in the activity of the corporation acquired or the activity resulting from the use of the assets acquired,
(ii)will result in the growth, efficiency or international competitiveness of a manufacturing or processing activity or other commercial activity in Canada,
(iii)would not proceed unless the loan required is insured by the Minister, and
(iv)would not proceed unless the Minister and the private lender agree to limit the liability of the person referred to in subsection (1) or the business enterprise referred to in subsection (2) to the lender to 10 per cent of the amount of the loan to be provided.
15#
Subject to section 17, the Minister may provide insurance on a loan made by a private lender to a person engaged or about to engage in a business in Canada that provides services, directly or indirectly, to a business enterprise in Canada that is engaged in international trade competition if that person requires the loan to establish, restructure or improve its operations in order to improve the position of the business enterprise in international trade competition.note
16#
Subject to section 17, where a person or a trustee or receiver authorized by law to carry on the activities of that person has previously obtained assistance by way of a loan or insurance on a loan made or authorized under these Regulations, the Minister may provide insurance on a loan to that person, trustee or receiver for the purpose of protecting the Crown’s interest in respect of the loan previously made or insured.note
Condition of Insurance
Amount of Insurance
Application for Insurance
19#
A private lender who wishes the Minister to provide insurance on a loan in accordance with these Regulations shall apply therefor to the Minister and shall provide such information as may be necessary to process the application.note
Reduction of Insurance and Insurance Fee
20#
(1)The amount of any insurance provided by the Minister pursuant to these Regulations may be reduced at the request of the private lender at such times and in such manner as may be agreed to by the Minister.
(2)The insurance fee payable by a private lender shall be 1 per cent per annum of the amount of insurance in force from time to time and shall be paid in advance to the Minister in semi-annual installments.
(3)Notwithstanding subsection (2), the Minister may, in respect of insurance provided pursuant to section 13, 14 or 16, waive or reduce the amount and vary the terms of payment of the insurance fee accordingly.
(4)If the amount of a loan made by a private lender is advanced in periodic advances, the Minister may, if required by the private lender, provide insurance pursuant to these Regulations on such advances.
Payment of Insurance
21#
Where a private lender has demanded repayment of a loan in respect of which insurance has been provided pursuant to these Regulations, the amount payable to the private lender shall not exceed the lesser of
(a)the amount of insurance in effect on the date of such demand; and
(b)in the case of
(i)a loan insured pursuant to section 12 or 15, 90 per cent of the loss incurred by the private lender, and
(ii)a loan insured pursuant to section 13 or 16, 100 per cent of the loss incurred by the private lender.
22#
Notwithstanding section 21, where a private lender has demanded repayment of a loan in respect of which insurance has been provided by the Minister pursuant to section 14, the amount payable to the private lender shall not exceed the lesser of
(a)the amount of insurance in effect on the date of such demand; and
(b)90 per cent of the loss incurred by the private lender excluding any amount recovered or recoverable under the guarantee obtained by the private lender in accordance with subparagraph 14(3)(a)(i).
note
Part IV · Contributions
24#
The Minister may make contributions to a business enterprise in respect of any of the following:
(a)the costs of engaging the services of a qualified consultant to develop a proposal to qualify for a loan or loan insurance under these Regulations or contributions under paragraph (c) or (d);
(b)the costs of engaging the services of a qualified consultant to identify new or improved products or to conduct product testing or market testing on such products;
(c)the costs of development and design of a new or improved and technologically advanced product, process or service capability that offers good prospects for commercial exploitation and benefit to Canada, which development and design are scientifically and technically feasible but represent technical risk;
(d)the costs of a project for the design of a new mass-produced durable product through an expansion of the industrial design program of the business enterprise where the industrial design activity is directed by a qualified industrial designer;
(e)the costs of engaging the services of a qualified consultant to develop a market strategy or market feasibility study to exploit a project in respect of which a loan, loan insurance or contribution was made or authorized by the Minister under these Regulations;
(f)the costs of engaging the services of a qualified consultant to undertake a study to determine the feasibility of implementing plans for a project to significantly enhance the productivity or efficiency of the project where
(i)the enhancement project involves a significant departure from the traditional productivity or efficiency practices of the business enterprise and only involves the existing available technology, and
(ii)there exists a potential for significant productivity or efficiency gains and a demonstrable uncertainty as to the benefits of the enhancement project; and
(g)the costs of engaging the services of a qualified consultant to protect Her Majesty’s interest in respect of any loan, insurance or a contribution made by the Minister pursuant to these Regulations.
note
25#
(1)Contributions made under section 24 shall be in an amount that is considered necessary to induce a business enterprise to undertake any of the matters described in that section without incurring significant economic hardship for the business enterprise.
(2)Notwithstanding subsection (1), contributions made in respect of
(a)any of the matters described in paragraphs 24(a) to (f) shall not exceed 75 per cent of its costs to the business enterprise; and
(b)an interest described in paragraph 24(g) shall not exceed 100 per cent of its costs to the business enterprise.
(3)Where the Minister makes a contribution to a business enterprise in respect of the costs referred to in paragraph 24(b), the business enterprise shall pay to Her Majesty a royalty of up to 5 per cent of the amount of any export sales of a new or improved product referred to in that paragraph, except that
(a)the aggregate of royalties shall not exceed the amount of the contribution; and
(b)no royalties are required to be paid in respect of sales made more than five years from the day the contribution is made to the business enterprise.
26#
Notwithstanding section 24, the Minister may make contributions to a business enterprise pursuant to that section in respect of a project only where,
(a)the project and the exploitation of the results thereof represent a significant burden in respect of the resources of the business enterprise; or
(b)the project would not be undertaken in Canada without a contribution by the Minister and the project and the exploitation of the results thereof offer significant benefit to Canada.
note
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(1)Subject to section 28.1, the Minister may make contributions to a designated business in respect of
(a)the costs of engaging the services of a qualified consultant required by the designated business to undertake a comprehensive analysis of the operations of the designated business and to develop adequate plans to restructure its operations to improve its ability to achieve efficient and sustained growth in the production and trade of Canadian goods and services or to adjust to changes in the domestic and external economic environment or to assist in the implementation of those plans, or
(b)the costs of a project to adjust or to restructure its operations to improve its ability to contribute to the efficient and sustained growth in the production and trade of internationally competitive Canadian goods and services or to adjust to changes in the domestic and external economic environment if the project would not be likely to be undertaken without a contribution by the Minister.
(2)A contribution made pursuant to subsection (1) shall not exceed
(a)75 per cent of the costs of the services of a consultant referred to in paragraph (1)(a);
(b)50 per cent of the capital costs of a project referred to in paragraph (1)(b) that is undertaken by the designated business within the designated community; and
(c)50 per cent of the preproduction expenses associated with a project referred to in paragraph (b).
(3)Notwithstanding subsection (1), where a designated business establishes that it is capable of undertaking a comprehensive analysis and of developing plans for restructuring referred to in that subsection, the analysis may be undertaken and the restructuring plans developed without the assistance of a qualified consultant.
28#
(1)Subject to section 28.1, the Minister may make contributions to an external or other business in respect of
(a)the costs of engaging the services of a qualified consultant to develop a proposal in respect of which a contribution may be made pursuant to paragraph (b), and
(b)the capital costs of a project to establish a manufacturing or processing activity or other commercial activity in a designated community
if the project would not be likely to be undertaken in the designated community without a contribution by the Minister.
(2)A contribution made pursuant to subsection (1) shall not exceed
(a)75 per cent of the costs of the services of a consultant referred to in paragraph (1)(a);
(b)50 per cent of the capital costs of a project referred to in paragraph (1)(b) that is undertaken by the external or other business in the designated community; and
(c)50 per cent of the preproduction expenses associated with a project referred to in paragraph (b).
(3) and (4)[Revoked, SOR/82-404, s. 5]
28.1#
(1)The Minister may make a contribution pursuant to sections 27 and 28 only where
(a)the date on which the application for assistance is approved by the Minister precedes the commencement of the services of consultants and relative costs or a capital project and relative costs, including preproduction expenses;
(b)the contribution to be made by the Minister in respect of the capital costs of a project and the preproduction expenses associated with the project and the preproduction expenses associated with the project, and any contribution in respect of those capital costs and preproduction expenses made or agreed to be made by the Government of Canada or by a government of any province of Canada does not exceed an amount equivalent to 50 per cent of the sum of the capital costs of the project and preproduction expenses associated with the project;
(c)full repayment of the contribution to be made by the Minister in respect of a capital project and in respect of preproduction expenses associated with the project has been made a condition of the contribution;
(d)the project offers net significant economic benefit to Canada and will not be likely to create competitive overcapacity in the relevant sector or industry; and
(e)in the case of projects to adjust, restructure or establish operations, the sum of the capital costs and the preproduction expenses associated with such projects will not be less than $100,000.
(2)Notwithstanding paragraph (1)(c), where
(a)the condition for repayment of a contribution provided for in that paragraph would result in the project not being undertaken in the designated community, and
(b)the project offers exceptional benefits to Canada,
the Minister may waive the requirement for repayment or may require repayment of less than the full amount of the contribution.
note
29#
(1)Where a designated business, an eligible manufacturer or an external or other business requires the services of a qualified consultant,
(a)to undertake a feasibility study and to assist in the development of plans for
(i)in the case of an external or other business, its merger with or its acquisition of a business enterprise, or
(ii)in the case of an eligible manufacturer or designated business, the establishment of a person to provide purchasing, marketing, training or other services to the eligible manufacturer or designated business, or
(b)to implement the plans referred to in paragraph (a),
the Minister may make a contribution to the designated business, eligible manufacturer, external or other business, person or consultant in an amount of not more than 75 per cent of the cost of the services.
(2)Notwithstanding subsection (1), where a designated business, an eligible manufacturer or an external or other business establishes that it is capable of undertaking a feasibility study and of developing plans referred to in that subsection, the feasibility study may be undertaken and the plans developed without the assistance of a qualified consultant.
30#
(1)Where
(a)a business enterprise submits plans for restructuring of its operations or for making an adjustment in its operations that will enable the business enterprise to adapt to changes in the domestic and external trading environment, and
(b)the business entreprise requires a contribution from the Minister to
(i)pay for the costs of the services of a consultant to prepare plans,
(ii)pay for the costs of the services of a consultant to conduct a comprehensive analysis of the plans referred to in subparagraph (i),
(iii)pay for the costs of the services of a consultant to assist the business enterprise to implement the plans referred to in subparagraph (i), and
(iv)pay for the costs of implementing the restructuring or adjustment plan referred to in paragraph (a),
(c)75 per cent of the costs of the services of the consultant referred to in subparagraph (b)(i), (ii) and (iii), and
(d)50 per cent of the direct costs of the acquisition, construction, expansion, modification, installation or conversion of machinery, equipment or buildings in respect of those segments of the restructuring plan that involve either a modernization of the operations of the business enterprise or an adjustment in its operations that will enable the business enterprise to adapt to changes in the domestic and external trading environment, where such direct costs will be not less than $50,000.
the Minister may make a contribution to the business enterprise in an amount not exceeding
(2)Notwithstanding subsection (1), where a business enterprise establishes that it is capable of undertaking a comprehensive analysis and of developing plans referred to in that subsection, the comprehensive analysis may be undertaken and the plans developed without the assistance of a qualified consultant.
30.1#
(1)Where
(a)a person submits plans for the establishment of a new business enterprise, and
(b)in the opinion of the Minister, the person requires a contribution from the Minister to
(i)pay for the costs of the services of a consultant to prepare plans,
(ii)pay for the costs of the services of a consultant to conduct a comprehensive analysis of the plans referred to in subparagraph (i),
(iii)pay for the costs of the services of a consultant to assist the business enterprise to implement the plans referred to in subparagraph (i), and
(iv)pay for the costs of establishing a new business enterprise,
(c)75 per cent of the costs of the services of the consultant referred to in subparagraphs (b)(i), (ii) and (iii), and
(d)50 per cent of the direct costs of the acquisition, construction, installation of machinery, equipment or buildings in respect of the establishment of the new business enterprise.
the Minister may make a contribution to the person in an amount not exceeding
(2)Notwithstanding subsection (1), where a person establishes that the person is capable of undertaking a comprehensive analysis and of developing plans referred to in that subsection, the comprehensive analysis may be undertaken and the plans developed without the assistance of a qualified consultant.
note
31#
(1)Where
(a)a business enterprise submits plans that were developed with the assistance of a qualified consultant and that are based on a feasibility study made with the assistance of a qualified consultant for the establishment of a person to provide purchasing, marketing, training and other services to the business enterprise and at least one other business enterprise, and
(b)the business enterprise requires a contribution to implement the plans referred to in paragraph (a),
(c)in an amount not exceeding $20,000 in respect of the costs of its incorporation,
(d)in each of the first three years following the establishment of the person, in an amount not exceeding the lesser of
(i)50 per cent, 33 1/3 per cent, and 25 per cent respectively of the general and operating expenses approved by the Minister, and
(ii)$150,000, and
(e)in an amount not exceeding 25 per cent of the direct costs of the acquisition, construction, expansion, modification, installation or conversion of machinery, equipment or buildings where such direct costs will be not less than $50,000.
the Minister may make a contribution to the person
(2)Notwithstanding subsection (1), where a business enterprise establishes that it is capable of undertaking a feasibility study and of developing plans referred to in that subsection, the feasibility study may be undertaken and the plans developed without the assistance of a qualified consultant.
32#
Where the services of a qualified consultant are required by a person to undertake a comprehensive analysis of a designated community to develop satisfactory plans
(a)for medium to long range industrial development in the designated community, and
(b)for effecting improvement in the ability of business enterprises in the designated community
(i)to achieve efficient and sustained growth in the production and trade of Canadian goods and services, or
(ii)to adjust to changes in the domestic and external economic environment,
the Minister may make a contribution to that person with respect to the costs of the services of the qualified consultant in an amount not to exceed 100 per cent of such costs.note
33#
The Minister shall not accept any application after January 31, 1986.note
Federal laws of Canada reproduced under the Reproduction of Federal Law Order (SI/97-5); not the official version. Source: Justice Laws Website.